September 4, 2006

As someone who grew up in the deprived 1970s and 1980s, I love the options Indians today have — in cars, telephones, apparel, jobs and so much more. Rejoicing in this choice (available to a small but rapidly increasing number of Indians) is one thing. And quite something else to suggest that the entire country is on a luxury goods shopping binge, as Val MacQueen does in this piece of fluff.

Also, while I’m fairly optimistic about India’s prospects, methinks market researcher Sarang Panchal of A. C. Nielsen is a tad carried away:“For the coming 12 month period, Indians are clearly the most optimistic country in the world. With 88 percent of Indians bullish about the country’s economic performance going forward, we are even more positive than China. In the context of the global economy, this forms an important inflection point in our perception even amongst the international investment community.”

Q) How large a sample does one need to ensure it represents all Indians, as Panchal’s survey claims? How does one measure optimism across countries? Any readers with market research backgrounds that can shed some light?

Sidebar: This isn’t the first time we’ve come across implausible market surveys. We suspect it won’t be the last.

Confidence in the long term economy does not necessarily translate into an optimistic outlook on life in general. Yes, availability and access to consumer goods has greatly improved; still, we have on eof the highest rates of private savings. Someone needs to developproper metrics to define “optimism”. In a highly pluralistic country like India with the range of diversity that exists, I suspect getting a common denominator for almost anything will be hard.

BTW- Val MacQueen has also got his understanding on Gandhi so completely wrong. Wish he had done some serious research into the freedom movement and Gandhi’s writings before coming up with a lot of mush. His observation that consumer complaints were ignored in the earlier era following MKG’s call for self-reliance, is inaccurate. Sure, consumer interests were ignored, but to ascribe that to Gandhian philosophy is plain wrong. Also, I find it quite amusing that the most customer oriented message that hangs in almost all PSUs and nationalised banks and is quoted elsewhere is one that was drafted by Gandhi!

Val MacQueen fails to grasp the deeper and actual facts of India and its history. Look at this paragraph for example:

“Now at last, riding on a new surge of confidence at home and overseas, Indians have ditched austerity, the spinning wheel and the Mahatma and are spending it up like maharajas. In a recent survey, 90 percent of them cheerfully admitted that they spend their disposable income on non-essentials.”

>>> He fails to understand that Mahatma’s struggle was to make India free hence encourging austerity and take up spinning to avoid imports from Britain.

>>> Is the figure of 90 percent a true representation of all of India being cheerful or just the middle classes?

They prolly need to survey somewhere betn 7 to 10 thousand people (based on India’s population) to come up with their 88% estimate with any decent margin of error. Arguably surveying in India is cheaper than some other countries but still I doubt Nielsen surveyed a good stratified sample….just like many of their other ratings and surveys, there is a liberal amt of extrapolation/guessing involved I am sure.

I recently posted on what could go wrong in China from a macroeconomic perspective, linking over to DiligenceChina blog. We got some good feedback from readers here, especially the wise comment by Mr. Li, but I want to highlight a…

Indian grwoth prospects cannot be ignored. But it is unwise to be overoptimistic. Compared to China India does have few advantages. So far the China has maintained fairly huge lead over india in almost all financial and social aspect.

Seems totally idotic to compare India with China, this shows that people who research soaps do not understand how to analyse macroeconomic trends. Better advised that such idiots do not do this survey and bring disrepute to the market research industry of India.

Refreshing to see you questioning the “India Shining” optimists, Prashant! Two points on the survey:

(1) The laws of probability are such that large sample sizes are not necessary to accurately represent a large population. It is true, the more diverse the sample size, the larger the sample size needs to be to ensure representatives from all of the population’s sub-groups. In the U.S., for example, sample sizes of about 800-1,000 routinely predict with great accuracy things like election outcomes (the 2000 presidential election being an exception, of course). And that’s in a population of 300,000,000 (though maybe only 100,000,000 voters). In any case, for India’s 1.2 billion people, I think the previous estimate by Alex may be a little on the high side. The point is, a strikingly small number of people, randomly chosen, can quite easily be representative of a large population (there will always be individual exceptions).

(2) The bigger problem with the survey is that it was probably done using a technique called “random digit dialing.” This means that a computer randomly dials phone numbers. Even if the numbers randomly dialed included mobiles, the survey would reach a quite unique segment of the Indian population. If this is the case, the survey results are not at all representative of the 600 million Indians (that’s a guess) who have no mobiles.